2020 (8) TMI 507 - AT - Income Tax

Revision u/s 263 - bogus purchases - HELD THAT - This is not the case of bogus purchases pursuant to the suppliers name being reflected as tainted dealer in the Sales Tax Department website of Government of Maharashtra. We find that the purchases from M/s. United Marketing made by the assessee is genuine based on the documentary evidences submitted in the paper book and also United Marketing responding before the ld. AO in response to the notice u/s.133(6) of the Act in the case of M/s. Goa Technology and Trade Pvt. Ltd., This squarely proves the identity of the said supplier. Disallowance has been made by the AO in the order giving effect to the order passed by the ld. CIT u/s.263 by following the directions of the ld. CIT. Hence, practically the hands of the ld. AO are tied which could be evident from the observations made by the ld. Administrative CIT in his Section 263 order. As stated earlier, the assessee should have preferred an appeal before this Tribunal against the order passed u/s.263 which was not done in the instant case. In this scenario, the assessee cannot have any grievance over the action of the ld. AO in making the disallowance of purchases by following the directions of the ld. CIT u/s.263. Accordingly, we feel that this appeal itself is not maintainable before us. - Decided against assessee.

Summary

Issues:
Delay in filing appeal, Justification of disallowance on account of unverifiable purchases

Analysis:
The appeal in ITA No.4450/Mum/2018 for A.Y.2009-10 was filed with a delay of 172 days, which was condoned by the Appellate Tribunal based on the reasons provided by the assessee. The main issue in this appeal was whether the disallowance of unverifiable purchases amounting to ?9,78,420/- was justified by the ld. CIT(A).

The assessee, engaged in retail business, had initially declared a total income of Nil for A.Y.2009-10, which was later revised by the ld. Administrative CIT under section 263 of the Income Tax Act, 1961. The revision was based on the disallowance of purchases claimed from M/s. United Marketing amounting to ?9,78,420/-. The ld. AO was directed to disallow these purchases, and the same was upheld by the ld. CIT(A).

During the proceedings, the assessee argued that the purchases from M/s. United Marketing were genuine, supported by documentary evidence and responses from the supplier. However, the disallowance was made by the ld. AO in compliance with the directions of the ld. CIT under section 263. The Appellate Tribunal noted that the assessee should have appealed against the order passed under section 263 but failed to do so, thereby limiting the Tribunal's jurisdiction to address the disallowance issue.

Ultimately, the Appellate Tribunal dismissed the appeal, stating that since the assessee did not challenge the order under section 263, they could not contest the disallowance made by the ld. AO. Therefore, the grounds raised by the assessee were dismissed, and the appeal was rejected.